Foreign Earned Income HELP

August 24, 2011 5:17 AM

Need Foreign-Earned Income help: I'm a Consultant working in Iraq...

1. I'm 90% sure that I will be able to stay out of the US for 330 (non-consecutive) days to ensure I get the federal tax exempt status for my foreign-earned income in 2011. What are the steps I need to take now? Do I still pay my estimated federal tax due on 9/15?

2. When does the clock start when calculating how many days were spent out of country? Would it begin in May 2011 and end May 2012? The problem with this is that I took a new job while I was already overseas, and my old job that I left was based out of NC - meaning I worked as an employee in NC full-time, but they also sent me to Iraq every few months for a couple weeks at a time - and they sent me over in May, but I didn't start with my new (current) company as a Consultant until June 5th, so do I start counting the clock when the old company sent me or when I started with the new one?

3. How to calculate which days 'count' - if I arrive into the US late in the day (close to midnight) will this count as a full day in the US? Also, if I leave the US on a particular day, let's say at noon, does this count as a full day in the US?

posted by bbhart113 to work & money (6 answers total)

Hire an accountant.
posted by Jairus at 5:56 AM on August 24, 2011 [2 favorites]

It is 330 days in any 12 month period. The periods can overlap. The first day is the first full day spent outside the country, so the day you arrived probably does not count unless (and I am serious) your plan passed over a foreign country before midnight. Only full 24 hour days spent outside the US count. Days spent in international waters do not count.

So, you start counting from the day after you arrived, and it doesn't matter which job you were employed by at the time.

As for estimated tax - generally yes, and you get a refund.
posted by Nothing at 6:13 AM on August 24, 2011

http://www.irs.gov/businesses/small/international/article/0,,id=96968,00.html
posted by Nothing at 6:14 AM on August 24, 2011

Also take note of the "tax home" requirements. You should be fine with that, though.
http://www.irs.gov/businesses/small/international/article/0,,id=96950,00.html
posted by Nothing at 6:15 AM on August 24, 2011

Seconding hiring an accountant. I'm capable of doing my own moderately complex returns in the US, and generally think even tax prep software is a waste of money, but the years I was an expat the accountant I used dealt with all sorts of areas of the tax code that saved me mutiples of what I paid him.
posted by JPD at 6:25 AM on August 24, 2011

JPD, can you refer me to your old accountant, the one I hired is terrible and I think I know more about tax law than her and that is a scary thought.
posted by bbhart113 at 6:34 AM on August 24, 2011